What are The Best Options of Secured Credit Cards?
Many people who are trying to rebuild their credit turn to secured cards for help. What is a secured credit card? Secured cards are credit cards guaranteed by a deposit in a savings account or certificate of deposit (CD). The concept is similar to getting a loan wherein a person needs to give collateral in order to be approved. There has to be a safety fund before banks take the risk of issuing a card to people with bad credit scores.
But in all other ways, a secured credit card works just like a standard credit card. Cardholders receive monthly bills that they must pay on time or incur high interest and penalties. At the same time, banks will report payment information to the credit bureaus, allowing cardholders to build their credit history and build up their credit score.
Also, secured card applicants should be aware that not all banks guarantee acceptance, so those with outstanding liens or those who have recently filed for bankruptcy will not qualify for some of these cards.
With all of these conditions taken into consideration, here are some of the best secured credit card options for people with a poor credit score:
Wells Fargo Secured Visa
People with a poor credit score can check out Wells Fargo Secured Credit Card. It is touted as one of the cards with better values in the secured card genre, after offering a modest annual fee of $18, and an acceptable interest rate.
An applicant must have been out of bankruptcy for one year and have no bad credit loans outstanding or unsettled liens. He or she will be given a credit limit that is set by the security deposit which can range from $300 to $10,000. There is also a $25 annual fee.
Citi Secured MasterCard
Unlike most secured cards that require customers to make a deposit in a no-interest savings account, Citi Secured MasterCard invests your deposit in CDs (Certificate of Deposit). It has a low annual fee of $29 and has no monthly maintenance fees.
The only warning is that there is an 18.24% APR, which is quite high if someone fails to pay on time. But since it invests deposits in a CD, then it is quite acceptable. If you have a good record with the secured card and have no bad credit loans, Citi will consider graduating you to a better, unsecured card after 18 months.
BankAmericard Secured Visa
Bank of America offers a fully secured Visa card to customers who want to rebuild their credit score. The secured credit card allows users to determine their credit line by making a deposit of between $300 and $4,900. It has an annual fee of $39 and an interest rate equal to 16.99%. After 12 months of secured credit card membership, your account can be reviewed to see if you are eligible to have your card converted to a standard account and your security deposit returned.
Capital One Secured MasterCard
This secured credit card has a reasonable $29 annual fee, and can give people a credit line of $200 even if they deposit as little as $49. If they deposit more — like $99 or $200 — they can increase their credit line up to $3,000.
In addition, there are no foreign transaction fees — which is true for all of the bank’s debit and credit cards. But owners of this credit card must make sure to never, ever leave a remaining balance because the APR is a high 22.9%. They must be up-to-date with their credit monitoring to avoid any trouble with their financial flow.
Open Sky Secured Visa Card
People trying to build credit scores can get an Open Sky Secured Visa Card that has low interest rates and low secured deposits of at least $200 to get a credit line of up to $3,000.
The APR is average at 9.75%, which is pretty much as good as it gets for consumers with bad credit. Public Savings, the card issuer, also says it will accept anyone, and that there will be no credit check needed for approval.
In the end, people who have been victimized by credit card scams or those who just failed to pay their bills on time (thus the poor credit score), can still turn things around for their financial history. They just have to choose which secured card best fits their needs and paying capacity, and all will be well.
Do you have a secured credit card? Would you recommend it to other people? If you have helpful information for others, please share it in the comments below.